Halozyme Therapeutics closed the previously announced $150 million royalty-backed debt transaction with investment funds managed by Pharmakon Advisors and Athyrium Capital Management.

The debt is secured by future royalties of ENHANZE products, received only from Halozyme’s collaborations with Roche and Baxalta.

“With the completion of this non-dilutive financing, we are well funded to initiate our Phase 3 study in pancreatic cancer patients and continue to execute our two pillar strategy in 2016,” said Dr. Helen Torley, president and chief executive officer.

The company announced details of the financing, including the formation of a wholly-owned subsidiary, Halozyme Royalty, which borrowed $150 million at a per annum interest rate of 8.75% plus the three-month LIBOR rate. Under the terms of the credit agreement, Halozyme Royalty will not be required to apply any of the royalty payments to repay the loan during 2016. Fifty percent of royalty payments received in 2017 and 100% of royalty payments received in 2018 and thereafter will be used to service the loan, subject to quarterly caps. Royalty payments that are not required to be applied to the loan will be retained by Halozyme Royalty and distributed to Halozyme.

Repayment of the loan is the sole obligation of Halozyme Royalty and is intended to be non-recourse to Halozyme Therapeutics and its other subsidiaries.

San Diego-based Halozyme Therapeutics is a biotechnology company focused on developing and commercializing novel oncology therapies that target the tumor microenvironment.